The Global Landscape of Mobile Microinsurance
Over the last three years, there has been a rapid increase in the number of mobile microinsurance products launched worldwide. This growth reflects the emergence of new business models and of non-traditional players keen on innovating through new channels. By expanding access and contributing to the ever-growing ecosystem of digital financial products offered to the bottom of the pyramid, this development represents a potentially significant new phase in the provision of microinsurance.
Here on the CGAP blog, we have already discussed how MMI is reshaping the insurance landscape in countries like Ghana, and have also taken a deeper dive into the business case of some of the most successful freemium strategies in this market. Today, we release “The Emerging Global Landscape of Mobile Microinsurance," our latest brief that describes a supply-side scan of products. The brief identifies over 84 products with a view to providing an initial basis for understanding various emerging trends and business models.
We note for instance that while the first MMI products were deployed in middle-income countries, since 2010 two-thirds of them have been launched in low-income countries. Much of this activity is in Sub-Saharan Africa: 54% of the total number of products surveyed were found in this region, compared to 23% in South Asia and 20 percent in East Asia and the Pacific.
Our analysis also identified five relatively distinct mobile microinsurance business models:
1. Insurers pursuing new segments, notably in lower income groups, through new products developed specifically for the mass market.
2. Insurers mainly pursuing efficiencies through technology, notably by leveraging mobile payments channels but also e.g. by using RFID tagging for cattle insurance.
3. MNOs seeking passive loyalty by offering insurance, generally free of any direct charge to customers, to all voice users who remain customers (perhaps on a specific plan).
4. MNOs seeking active loyalty by also providing insurance coverage free of any direct charge, but only to customers who meet minimum targets e.g. on airtime use or mobile money transactions.
5. MNOs seeking loyalty and direct revenue by offering paid insurance products as a value-added service to voice customers.
In addition, the brief highlights the growing importance of specialized microinsurance B2B service providers, such as MicroEnsure and Bima, that offer both MNOs and insurers services in mobile microinsurance product development, distribution and administration. By virtue of highly specialized expertise and a strong belief in the transformative potential of mobile insurance delivery, these companies make mobile microinsurance products easier for providers to deploy while also continually pushing the boundaries of what can be offered. While their business models are only a few years old, these companies are expanding quickly and growing the global mobile microinsurance footprint in the process. BIMA at four years old is already in nine markets and Microensure just this past year entered into partnerships with Telenor in Asia and Airtel in Africa to roll out mobile microinsurance products across dozens of countries.
From this scan a promising picture of the supply-side MMI landscape emerges, with increasing numbers of new deployments in a broadening range of countries. The results of several early successes show that the uptake of MMI products can be very rapid and substantially expand national insurance coverage in a few short years. With this impressive ability to scale however also come important questions about risk, some of which have been voiced on the blog before. And it is not yet clear what the new business models will mean for the insurers that underwrite the policies but have no relationship with the customer.
Going forward, it is therefore evident that a deeper understanding of the implications for customers, MNOs and traditional providers of these evolving business models is needed in order to ensure a balance between the interests of providers and those of new customer segments characterized by low literacy and lack of experience with insurance products.
t is heartening to see that Mobile Microinsurance providers have started to experiment with diverse models, instead of searching for "The" perfect delivery model, something that clogged the development of microfinance in general and conventional microinsurance specifically.
Success and weakness of the models, however will depend upon how best they align value expectation of each of the stakeholders in the supply chain. In January, 2014, MicroSave presented in the College of Agriculture Banking, Reserve Bank of India on the possible value levers in the emerging models of mobile microinsurance or more generically insurance through mobile phones/digital media.
See the presentation here: http://www.microsave.net/resource/using_mobile_agent_channel_for_insura…
Thanks for bringing out the out that mobile phone based insurance is just not MNO driven. The mobile phones by their very nature can help in bringing about efficiency across the insurance value chain... and help in better "connect" between the insurer and the insured. Additional services that can help in building trust in insurance are also facilitated through the mobile phone.